Part 6.
CREDIT UNION DEPARTMENT
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter A. GENERAL RULES
7 TAC §91.101
The Texas Credit Union Commission proposes amendments to §91.101
relating to definitions and interpretations. The amendment makes several changes,
which more clearly defines the four types of community of interests currently
recognized by the Department, and revises the definition of "office" to include
a credit union owned ATM, a shared branch or a shared network.
The amendments to the rule are proposed as a result of the enactment of
federal regulations creating less restrictive field of membership rules for
federally chartered credit unions. In keeping with the "parity" provisions
of §123.003, Finance Code, the Department felt that a revision of §91.101
and §91.301 was necessary to provide as much flexibility for state chartered
credit unions as the federal chartered credit unions now enjoy. Further, since
the Commission has adopted a revised §91.210 expanding foreign credit
union's field of membership, the Department wanted to incorporate the same
review standards for field of membership expansion by state credit unions
and have the community of interest definitions apply equally to both foreign
and state credit unions.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be clarification of the applicable provisions
and keeping state chartered credit unions from being at a competitive disadvantage
with federally chartered credit unions. There is no anticipated effect on
small businesses as a result of adopting the amended rule. There is no economic
cost anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the Texas Register to Kerri T. Galvin, General Counsel,
Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code, specifically including the character of field of membership
and Texas Finance Code, §122.012, which authorizes the commission to
adopt rules prescribing what constitutes a place of business. This amendment
is also proposed under §123.003, Finance Code. The Commission interprets
this section as authorizing it, in conjunction with the exercise of its specific
rulemaking authority, to adopt rules reflecting the statutory right of state
chartered credit unions to engage in any activity, exercise any power, or
make any loan or investment, that they could engage in, exercise, or make
if they were chartered as federal credit unions.
The specific sections affected by the proposed amendment is Texas Finance
Code, §§122.001, 122.005, 122.006, 122.011 and 122.012.
§91.101.Definitions and Interpretations.
(a)
Words and terms used in this chapter that are defined in
Finance Code §121.002, have the same meanings as defined in the Finance
Code. The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Act - the Texas Credit Union Act (Texas Finance Code, Subtitle
D).
(2)
Allowance for loan and lease losses (ALLL) - a general
valuation allowance that has been established through charges against earnings
to absorb losses on loans and lease financing receivables. An ALLL excludes
the regular reserve and special reserves.
(3)
Applicant - an individual or credit union that has submitted
an application to the commissioner.
(4)
Application - a written request filed by an applicant with
the department seeking to incorporate, amend articles of incorporation or
bylaws, deviate from standard bylaws, obtain a certificate of authority to
do business in the state of Texas or to obtain other relief for which the
commission is authorized by the act to issue a final decision or order subject
to judicial review.
(5)
Automated teller machine (ATM) - an automated, unstaffed
credit union facility owned by or operated exclusively for the credit union
at which deposits are received, cash dispensed, or money lent.
(6)
Community of interest - a unifying factor among persons
that by virtue of its existence, facilitates the successful organization of
a new credit union or promotes economic viability of an existing credit union.
The types of [
(A)
Occupational - based on an employment relationship
that may be established by:
[
(i)
employment (or a long term contractual
relationship equivalent to employment) by a single employer, affiliated employers
or employers under common ownership with at least a 10% ownership interest;
(ii)
employment or attendance at a school;
or .
(iii)
employment in the same trade, industry
or profession (TIP) with a close nexus and narrow commonality of interest,
which is geographically limited.
(B)
Associational - based on groups consisting primarily
of natural persons whose members participate in activities developing common
loyalties, mutual benefits, or mutual interests. In determining whether a
group has an associational community of interest, the commissioner shall consider
the totality of the circumstances, which include:
[
(i)
whether the members pay dues,
(ii)
whether the members participate in furtherance
of the goals of the association,
(iii)
whether the members have voting rights,
(iv)
whether there is a membership list,
(v)
whether the association sponsors activities,
(vi)
what the association's membership eligibility
requirements are, and
(vii)
the frequency of meetings. Associations
formed primarily to qualify for credit union membership and associations based
on client or customer relationships, do not have a sufficient associational
community of interest
(C)
Geographic - based on a clearly defined and specific
geographic area where persons have common interests and/or interact. More
than one credit union may share the same geographic community of interest.
There are currently four types of affinity on which a geographic community
of interest can be based: persons, who
[
(i)
live in,
(ii)
worship in,
(iii)
attend school in, or
(iv)
work in that community. The geographic
community of interest requirements are met if the area to be served is in
a recognized single political jurisdiction, e.g., a city or a county, or a
portion thereof
(D)
Other - The commissioner may authorize other types
of community of interest, if the commissioner determines that either a credit
union or foreign credit union has sufficiently demonstrated that a proposed
[
(7)
Construction or development loan - a financing arrangement
for the purpose of acquiring property or rights to property, including land
or structures, with the intent of converting the property into income-producing
property, including residential housing for rental or sale, commercial, industrial
or similar use.
(8)
Core capital - has the same meaning as "tier one capital"
as set forth in the capital regulations adopted by the appropriate federal
banking regulatory agency.
(9)
Corporate credit union - a credit union whose field of
membership consists primarily of other credit unions.
(10)
Day - whenever periods of time are specified in this title
in days, calendar days are intended. When the day, or the last day fixed by
statute or under this title for taking any action falls on Saturday, Sunday,
or a state holiday, the action may be taken on the next succeeding day which
is not a Saturday, Sunday, or a state holiday.
(11)
Department newsletter - the monthly publication that serves
as an official notice of all applications, and by which procedures to protest
applications are described.
(12)
Field of membership (FOM) - refers to the totality of
persons a credit union may accept as members. The FOM may consist of one group,
several groups with a related community of interest, or several unrelated
groups with each having its own community of interest.
(13)
Imminent danger of insolvency - a circumstance or condition
in which a credit union is unable or lacks the means to meet its current obligations
as they come due in the regular and ordinary course of business, even if the
value of its assets exceeds its liabilities; or the credit union has a positive
net worth ratio equal to two percent or less of its assets.
(14)
Improved residential property - real property consisting
of a residential dwelling having one to four dwelling units, at least one
of which is occupied by the owner of the property. This term shall also include
a one to four unit dwelling occupied in whole or in part by the owner on a
seasonal basis.
(15)
Indirect financing - a program in which a credit union
makes the credit decision in a transaction where the credit is extended by
the vendor and assigned to the credit union or a loan transaction that generally
involves substantial participation in and origination of the transaction by
a vendor.
(16)
Loan-to-value ratio - the aggregate amount of all sums
owed on an item of collateral securing a loan divided by the value of the
collateral.
(17)
Loan and extension of credit - a direct or indirect advance
of funds to a member, or on that member's behalf, that is conditioned upon
the repayment of the funds by the member or the application of collateral.
The terminology also includes the purchase of a member's loan or other obligation,
a lease financing transaction, a credit sale, a line of credit or loan commitment
under which the credit union is contractually obligated to advance funds to
or on behalf of a member, an advance of funds to honor a check or share draft
drawn on the credit union by a member, or any other indebtedness not classified
as an investment security.
(18)
Manufactured home - a HUD-code manufactured home as defined
by the Texas Manufactured Housing Standards Act.
(19)
Metropolitan Statistical Area (MSA) - a geographic area
as defined by the director of the U. S. Office of Management and Budget.
(20)
Mobile office - a branch office that does not have a single,
permanent site, including a vehicle that travels to various public locations
to enable members to conduct their credit union business.
(21)
Office - includes any [
(A)
the credit union has an ownership interest
in the service facility either directly or through a CUSO or similar organization;
or
(B)
the service facility is local to the credit
union and the credit union is an authorized participant in the service center.
(22)
Overlap - the situation which exists when a group of persons
is eligible for membership in two or more state, foreign, or federal credit
unions doing business in this state. Notwithstanding this provision, no overlap
exists if eligibility for credit union membership results solely from a family
relationship.
(23)
Person - an individual, partnership, corporation, association,
government, governmental subdivision or agency, business trust, estate, trust,
or any other public or private entity.
(24)
Principal office - the home office of a credit union.
(25)
Protestant - a credit union that opposes or objects to
the relief requested by an applicant.
(26)
Remote service facility - an automated, unstaffed credit
union facility owned or operated by, or operated for, the credit union, such
as an automated teller machine, cash dispensing machine, point-of-sale terminal,
or other remote electronic facility, at which deposits are received, cash
dispensed, or money lent.
(27)
Reserves - allocations of retained earnings and includes
regular and special reserves, except for any allowances for loan, lease or
investment losses.
(28)
Resident of this state - a person physically located in,
living in or employed in the state of Texas.
(29)
Respondent - a credit union or other person against whom
a disciplinary proceeding is directed by the department.
(30)
Shared service center - a facility which is connected
electronically with two or more credit unions so as to permit the facility,
through personnel at the facility and the electronic connection, to provide
a credit union member at the facility the same credit union services that
the credit union member could lawfully obtain at the principal office of the
member's credit union.
(31)
Secured credit - a loan made or extension of credit given
upon an assignment of an interest in collateral pursuant to applicable state
laws so as to make the enforcement or promise more certain than the mere personal
obligation of the debtor or promisor. Any assignment may include an interest
in personal property or real property or a combination thereof.
(32)
Title - title 7, Part VI of the Texas Administrative Code
(TAC), Banking and Securities, which contains all of the department's rules.
(33)
Underserved area - a geographic area, which could be described
as one or more contiguous metropolitan statistical areas (MSA) or one or more
contiguous political subdivisions, including counties, cities, and towns,
that satisfy any one of the following criteria:
(A)
A majority of the residents earn less than 80 percent of
the average for all wage earners as established by the u. S. Bureau of labor
statistics;
(B)
The annual household income for a majority of the residents
falls at or below 80 percent of the median household income for the nation;
or
(C)
The commission makes a determination that the lack of available
or adequate financial services has adversely effected economic development
within the specified area.
(34)
Uninsured membership share - funds paid into a credit
union by a member that constitute uninsured capital under conditions established
by the credit union and agreed to by the member including possible reduction
under section 122.105 of the act, risk of loss through operations, or other
forfeiture. Such funds shall be considered an interest in the capital of the
credit union upon liquidation, merger, or conversion.
(35)
Unsecured credit - a loan or extension of credit based
solely upon the general credit financial standing of the borrower. The term
shall include loans or other extensions of credit supported by the signature
of a co-maker, guarantor, or endorser.
(b)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on July 21, 2003.
TRD-200304399
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: September 7, 2003
For further information, please call: (512) 837-9236
7 TAC §91.201
The Texas Credit Union Commission proposes amendments to §91.201
relating to incorporation procedures. The amendment would increase the size
of the group that an overlap would not be considered adverse to another credit
union. Specifically, the overlap would be considered incidental in nature
for any group less than 3,000.
The amendments to the rule are proposed as a result of the enactment of
federal regulations which provides that overlapping fields of membership involving
groups of less than 3,000 being classified as an incidental overlap and no
overlap analysis is required for federally chartered credit unions. Specifically,
the National Credit Union Administration found no empirical evidence to indicate
that overlaps have an adverse impact on credit unions and believes overlaps
should generally be permitted. Therefore, in keeping with the "parity" provisions
of Section 123.003, Finance Code, the Department felt that a revision of §91.201
was necessary to provide as much flexibility for state chartered credit unions
as the federal chartered credit unions now enjoy.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be clarification of the applicable provisions
and keeping state chartered credit unions from being at a competitive disadvantage
with federally chartered credit unions. There is no anticipated effect on
small businesses as a result of adopting the amended rule. There is no economic
cost anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the Texas Register to Kerri T. Galvin, General Counsel,
Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-1699.
The amendment is proposed under the provision of the Texas Finance
Code, Section 15.402, which authorizes the commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code, specifically including the character of field of membership.
This amendment is also proposed under Section 123.003, Finance Code. The Commission
interprets this section as authorizing it, in conjunction with the exercise
of its specific rulemaking authority, to adopt rules reflecting the statutory
right of state chartered credit unions to engage in any activity, exercise
any power, or make any loan or investment, that they could engage in, exercise,
or make if they were chartered as federal credit unions.
The specific sections affected by the proposed amendment is Texas Finance
Code, Sections 122.001, 122.005, 122.006 and 122.011.
§91.201.Incorporation Procedures.
(a) - (c)
(No change.)
(d)
Proposed credit unions must investigate the possibility
of an overlap with existing state or federal credit unions doing business
in this state prior to submitting an application. When an overlap situation
does arise, officials of the involved entities must attempt to resolve the
overlap issue. Typically, an overlap will not be considered adverse to the
overlapped credit union if:
(1)
the group has
less than 3000
[
(2)
the overlapped credit union does not object to the overlap;
(3)
there is limited participation by members or employees
of the group in the original credit union after the expiration of a reasonable
period of time; or
(4)
a single occupational or associational based credit union
overlaps a community chartered credit union.
(e) - (f)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on July 21, 2003.
TRD-200304398
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: September 7, 2003
For further information, please call: (512) 837-9236
7 TAC §91.301
The Texas Credit Union Commission proposes amendments to §91.301,
relating to field of membership. The amendment clarifies the criteria for
field of membership and makes certain conforming language changes to ensure
consistency with the recently adopted 7 TAC §91.210.
The amendments to the rule are proposed as a result of the enactment of
federal regulations creating less restrictive field of membership rules for
federally chartered credit unions. In keeping with the "parity" provisions
of §123.003, Finance Code, the Department felt that a revision of §91.101
and §91.301 was necessary to provide as much flexibility for state chartered
credit unions as the federal chartered credit unions now enjoy. Further, since
the Commission has adopted a revised §91.210 expanding foreign credit
union's field of membership, the Department wanted to incorporate the same
review standards for field of membership expansion by state credit unions
and have the community of interest definitions apply equally to both foreign
and state credit unions.
Kerri T. Galvin, General Counsel, has determined that there will be no
fiscal implications for state or local government as a result of enforcing
or administering the proposed amendments.
Ms. Galvin has also determined that for each year of the first five years
the proposed amended rule is in effect, the public benefits anticipated as
a result of enforcing the rule will be clarification of the applicable provisions
and keeping state chartered credit unions from being at a competitive disadvantage
with federally chartered credit unions. There is no anticipated effect on
small businesses as a result of adopting the amended rule. There is no economic
cost anticipated to credit unions for complying with the amendments if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699.
The amendments are proposed under the provision of the Texas
Finance Code, §15.402, which authorizes the commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the
Texas Finance Code, specifically including the character of field of membership.
This amendment is also proposed under §123.003, Finance Code. The Commission
interprets this section as authorizing it, in conjunction with the exercise
of its specific rulemaking authority, to adopt rules reflecting the statutory
right of state chartered credit unions to engage in any activity, exercise
any power, or make any loan or investment, that they could engage in, exercise,
or make if they were chartered as federal credit unions.
The specific sections affected by the proposed amendment are Texas Finance
Code, §§122.001, 122.005, 122.006 and 122.011.
§91.301.Field of Membership.
(a)
Approval of Field of Membership.
State
credit unions will be allowed to have, as a minimum, at least as much flexibility
as federal credit unions in the regulation of fields of membership.
The commissioner may approve a state credit union's field of membership under
its original articles of incorporation and bylaws or pursuant to a request
for approval of an amendment of its bylaws to include groups with a communities
of interest (Group) that are within the credit union's local service area.
In this section, local service area shall mean an area that is within reasonable
proximity of a credit union's office, allowing members to be realistically
served from that office. For purposes of field of membership, the Group as
a whole will be considered to be within the local service area when:
[
(1)
A majority of the persons in the Group
live, work, or gather regularly with the local service area;
(2)
The Group's headquarters is located with
the local service area; or
(3)
The persons in the Group are "paid from"
or "supervised from" an office or facility located within the local service
area. The commissioner may impose a geographical limitation on any field of
membership if the commissioner reasonably determines that the applicant credit
union does not have the ability to serve a larger group or there are other
operational concerns.
(b)
Other persons eligible for membership.
A number of persons by virtue of their close relationship to a Group may be
included in the field of membership at the option of the applicant credit
union. These include:
(1)
members of the family or household of
a member of the Group;
(2)
volunteers performing services for or
on behalf of the Group;
(3)
organizations owned or controlled by a
member of the Group;
(4)
spouse of persons who died while in the
Group;
(5)
employees of the credit union;
(6)
subsidiaries of the credit unions; and
(7)
corporate or other legal entities.
[(1)
Occupational community of interest.]
[(A)
This community of interest is based on an employment relationship
with a specified employer. Persons sharing this community of interest may
be geographically dispersed. Employees of a parent corporation and its subsidiaries
and persons under contract to work regularly for an enterprise may be considered
under a single occupational community of interest. Each category to be served
(e.g., subsidiaries, contractors) should be separately listed in section 3.01
of the credit union's bylaws, if practical. Persons employed by different
entities, even if closely related geographically, persons working at a single
shopping center, industrial park, or office building, for example, are not
treated as having an occupational community of interest.]
[(B)
All occupational communities of interest should include
a geographic definition: e.g., "employees, officials, and persons who work
under contract regularly for ABC Corporation or any of its subsidiaries, who
work in Houston, Texas." Other acceptable geographic definitions are "employees
... who are paid from .... "or "employees ... who are supervised from ...."]
[(C)
The employer may also be included in this community of
interest -- e.g., "ABC Corporation and its subsidiaries."]
[(D)
Some examples of occupational group definitions are:]
[(i)
"employees of the Scott Manufacturing Company who work
in El Paso, Texas ...;"]
[(ii)
"employees and elected and appointed officials of municipal
government in Tyler, Texas ...;"]
[(iii)
"employees of Sharp Drillbit Company and its subsidiary,
Drillbit Salvage Company, who work in Midland or Houston, Texas ...;"]
[(iv)
"personnel of fleet units of the United States Navy home
port at Ingleside, Texas ...;"]
[(v)
"civilian and military personnel of the United States
Government who work or are stationed at, or are attached or assigned to Fort
Hood, Texas, or those who are retired from, or their dependents or dependent
survivors who are eligible by law or regulations to receive and are receiving
benefits or services from that military installation ...;"]
[(vi)
"employees of these contractors who work regularly at
United States Naval Shipyard in Ingleside, Texas ...;"]
[(vii)
"employees, doctor, medical staff, technicians, medical
and nursing students who work at Galveston Medical Center at the locations
stated: ...;"]
[(viii)
"employees, and teachers who work for the Fort Worth
Independent School District in Fort Worth, Texas...."]
[(E)
Some examples of insufficiently defined occupational groups
are:]
[(i)
"employees of engineering firms in Houston, Texas;" (No
common employer; names of firms must be stated; however, may be the basis
for a multiple group.)]
[(ii)
"persons employed or working in Dallas, Texas;" (No common
employer; names of firms must be stated.)]
[(iii)
"persons working in the entertainment industry in Texas."
(No common employer; names of firms should be stated.)]
[(2)
Associational community of interest.]
[(A)
This community of interest is generally based on groups
consisting primarily of natural persons who participate in activities developing
common loyalties, mutual benefits, and mutual interest. Qualifying associational
groups must hold meetings open to all natural person members at least once
a year, must sponsor other activities providing for contact among natural
persons members, and must have an authoritative definition of who is eligible
for membership -- usually, this will be in the associations' constitution
and bylaws. The clarity of the associational group's definition and compactness
of its membership will be important criteria in reviewing the application.
The department policy is to organize associational charters at the lowest
organizational level which is economically feasible.]
[(B)
Students constitute an associational community of interest
and may qualify for a credit union charter.]
[(C)
Associations formed primarily to obtain a credit union
charter do not have a sufficient associational community of interest; nor
do associations based on a client or customer relationship (e.g., an insurance
company's customers or a buyer's club).]
[(D)
The department normally charters associational credit
unions consisting of natural person members. The department will allow nonnatural
persons (e.g., corporate sponsor or organizations of members) to be eligible
for membership.]
[(E)
Moreover, the community of interest usually would extend
to the association's members and their employees. However, situations may
exist where the employees of a member of an association do not have a sufficiently
close tie to the association to be included.]
[(F)
Homeowner associations, tenant groups, electric co-ops,
consumer groups, and other groups of persons having an interest in a particular
cause and certain consumer cooperatives may be eligible to receive a charter,
however, they must make a strong showing of common activities and economic
viability. Newly-organized associations must make similar showing; experience
has shown that a new group's efforts are best focused on solidifying member
interest before attempting to offer credit union service.]
[(G)
All associational communities of interest will include
a definition of the group and a geographic or operational area limitation,
unless the constitution or bylaws of the associational group limit the geographical
area -- e.g., "Members of the Small Businessmen Association living or working
in Dallas, Texas who qualify for membership in accordance with its constitution
and bylaws in effect on January 21, 1989."]
[(H)
The association itself may also be included in the field
of membership; e.g., "ABC Association."]
[(I)
Some examples of associational group definitions are:]
[(i)
"regular members of Locals 10 and 13, IBEW Union, Houston,
Texas, who qualify for membership in accordance with their constitution and
bylaws in effect on May 20, 1989;"]
[(ii)
"members of the Texas Farm Bureau who live or work in
Williamson or adjacent counties, who qualify for membership in accordance
with its constitution and bylaws in effect on March 7, 1990;"]
[(iii)
"members of the Catholic Church who live or work in
Del Rio, Texas;"]
[(iv)
"members of the First Baptist Church in Georgetown, Texas;"]
[(v)
"regular members of the Corporate Executives Association,
located in Dallas, Texas, who live or work in Dallas, Texas, who qualify for
membership in accordance with its constitution and bylaws in effect on December
1, 1985;"]
[(vi)
"members of the Lower Colorado River Authority located
in Austin, Texas."]
[(J)
Some examples of insufficiently defined association group
definitions are:]
[(i)
"members of military service clubs in the State of Texas."
(No single associational tie; specific clubs and locations must be named;
may be considered as multiple group.)]
[(ii)
"veterans of United States military service."]
[(K)
Some examples of unacceptable associational communities
of interest are:]
[(i)
"ABC Buyers Club." (An interest in purchasing only does
not meet associational standards.)]
[(ii)
"customers of ABC Insurance Company." (Policyholders
or customer/client relationships do not meet associational standards.)]
[
[(A)
This community of interest is based upon employment, or
residence within a clearly defined and specified geographic area(s). Business
entities within the specified geographic area(s) may also qualify for membership.
Given the diversity of community characteristics throughout the state and
the department's goal of making credit union service available to all eligible
groups who wish to have it, the department has established the following guidelines:]
[(i)
The geographic area(s) must be clearly specified.]
[(ii)
The application must establish that the area(s) is recognized
as a distinct neighborhood, community, or geographic area(s). For the purposes
of this section a recognizable community is a geographical area which possesses
such characteristics that the residents of the area share a definable community
of interest or sense of identification with each other which may be based
upon mutual interests, goals, community pride or other similar elements.]
[(B)
A typical definition of a geographic community of interest
is: "Persons who live, work or are located in ABC, the area of XYZ City bounded
by Fern Street on the north, Long Street on the east, Fourth Street on the
south, and Elm Avenue on the west."]
[(C)
Additional criteria may be considered for an application
to convert to or expand an existing community and may include, but not be
limited to, providing for a protective exclusion for honoring existing credit
unions in the proposed area(s).]
[(D)
Some examples of geographic community of interest definitions
are:]
[(i)
"persons who live, work or are located in Brown County,
Texas;]
[(ii)
"persons who live or work in and business entities located
in Spring Branch Independent School District, Houston, Texas;"]
[(iii)
"persons who live or work are located within a ten-mile
radius of El Campo, Texas".]
[(E)
Some examples of insufficiently defined geographic community
of interest definitions are:]
[(i)
"persons who live or work in East Texas;"]
[(ii)
"persons who live or work in the ship channel section
of Houston, Texas."]
(c)
[
(1)
[
(2)
[
(A)
[
(B)
[
(d)
[
(1)
[
(2)
[
(3)
[
(4)
[
(A)
[
(B)
[
(C)
[
(D)
[
(E)
[
(F)
[
(5)
[
(6)
[
(e)
[
(1)
[
(2)
[
(3)
[
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on July 21, 2003.
TRD-200304397
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: September 7, 2003
For further information, please call: (512) 837-9236
factors included
]
community of interest currently
recognized
are:
Employment by or a work-related relationship
with an enterprise;
]
Membership in
an organization with a primary purpose of other than making credit union services
available to its members
].
Residence, employment
, or attending school within a certain geographic area; or
].
Such other
] factor [
that
] creates an identifiable
affinity among the persons [
to be included within a credit union's field
of membership
]
within the proposed group . Such a factor shall
be well-defined, have a geographic definition, and may not circumvent any
limitation or restriction imposed on one of the other enumerated types
.
branch office,
] service
facility or place of business established by a credit union at which deposits
are received, checks or share drafts paid, or money lent.
This definition
includes a credit union owned branch, a mobile branch, an office operated
on a regularly scheduled weekly basis, a credit union owned ATM, or a credit
union owned electronic facility that meets, at a minimum, these requirements;
however, it does not include the credit union's Internet website. This definition
also includes a shared branch or a shared branch network if either:
[
A branch does not include an automated teller machine (ATM), a shared service
center, or a remote service facility.
]
Subchapter B. ORGANIZATION PROCEDURES
300 or less
] primary potential members or the overlap is otherwise incidental in
nature;
Subchapter C. MEMBERS
The following guidelines and standards shall be considered by the commissioner
in evaluating field of membership requests.
]
(3)
Geographic community of interest.]
(4)
] Multiple-
groups
[
group charters
].
(A)
] The
commissioner
[
department
] may
approve
[
charter
] a credit
union's original articles of incorporations and bylaws or a request for approval
of an amendment to a credit union's bylaws
[
union
] to serve
one or more communities of interest or a combination of types of communities
of interest
[
a combination of definable occupational, associational
and/or geographic groups
].
(B)
] In addition to general [
chartering
] requirements, special requirements pertaining to multiple-
Group
[
group
] applications may be required before the
commissioner
[
department
] will grant such a
certificate
or approve such an amendment
[
charter
].
(i)
] Each
Group
[
group
] to be included in the proposed field of membership of the credit
union must have its own community of interest.
(ii)
] Each
associational or
occupational Group
[
group
] must individually request inclusion
in the proposed credit union's
field of membership
[
charter
].
(5)
] Overlap protection.
(A)
] The commissioner will
only
consider the financial effect of an overlap proposed by an application
to expand a credit union's field of membership or when a charter application
proposes an overlap
for a Group of 3,000 members or more
. [
Generally, the department will not charter or otherwise authorize two or more
credit unions to serve the same single occupational or associational group.
] An overlap is permitted
for a Group of less than 3,000 members
or
when the expansion's beneficial effect in meeting the convenience
and needs of the members of
a Group of 3,000 members or more
[
the group proposed to be included in the field of membership
] outweighs
any adverse effect on the overlapped credit union(s).
(B)
] The commissioner will weigh
the information in support of the application and any information provided
by a protesting or affected credit union. If the applicant has the financial
capacity to serve the financial needs of the proposed members, demonstrates
economic feasibility, complies with the requirements of this rule, and no
protestant reasonably establishes a basis for denying the request, it shall
be approved.
(C)
] If a finding is made that overlap
protection is warranted, the commissioner shall reject the application or
require the applicant to limit or eliminate the overlap by adding exclusionary
language to the text of the amendment, e.g., "excluding persons eligible for
primary membership in any occupation or association based credit union that
has an office within a specified proximity of the applicant credit union at
the time membership is sought." Generally, overlap protection will not be
considered warranted unless the financial effect on the overlapped credit
union will present a safety and soundness concern. Exclusionary clauses are
rarely appropriate for inclusion on a geographic community of interest [
credit union
].
(D)
] Generally, if the overlapped
credit union does not submit a notice of protest form, and the department
determines that there is no safety and soundness problem, an overlap will
be permitted. If, however, a notice of protest is filed, the commissioner
will consider the following in performing an overlap analysis:
(i)
] whether the overlap is incidental
in nature, ie., the group(s) in question is so small as to have no material
effect on the overlapped credit union;
(ii)
] whether there is limited participation
by members of the group(s) in the overlapped credit union after the expiration
of a reasonable period of time;
(iii)
] whether the overlapped credit
union provides requested service;
(iv)
] the financial effect on the
overlapped credit union;
(v)
] the desires of the group(s);
and
(vi)
] the best interests of the
affected group(s) and the credit union members involved.
(E)
] Where a sponsor organization
expands its operations internally, by acquisition or otherwise, the credit
union may serve these new entrants to its field of membership if they are
part of the community of interest described in the credit union's bylaws.
Where acquisitions are made which add a new subsidiary or affiliate, the group
cannot be served until the entity is included in the field of membership through
the application process.
(F)
] Credit unions affected by the
organizational restructuring or merger of a group within its field of membership
must apply for a modification of their fields of membership to reflect the
group to be served.
(6)
] Underserved communities.
(A)
] All credit unions may include
in their fields of membership, without regard to location, communities satisfying
the definition for underserved areas. More than one credit union can serve
the same underserved area.
(B)
] Once an underserved area has
been added to a credit union's field of membership, the credit union must
establish and maintain an office or facility in the community. For the purposes
of this subsection
,
service facility is defined as a place where
shares are accepted for members' accounts, loan applications are accepted
and loan proceeds are disbursed. This definition includes a credit union owned
branch, a shared branch, a mobile branch, and an office operated on a regularly
scheduled weekly basis, or a credit union owned electronic facility that meets,
at a minimum, these requirements. This definition does not include an
ATM or a credit union's Internet website
[
atm
].
(C)
] A credit union desiring to
add an underserved area must document that the community meets the definition.
In addition, the credit union must develop a business plan specifying how
it will serve the community. The business plan, at a minimum, must identify
the credit and depository needs of the community and detail how the credit
union plans to serve those needs. The credit union will be expected to regularly
review the business plan to determine if the community is being adequately
served. The commissioner may require periodic service status reports from
a credit union pertaining to the underserved area to ensure that the needs
of the area are being met, as well as requiring such reports before allowing
a credit union to add an additional unserved area.
Subchapter E. DIRECTION OF AFFAIRS